Small and midcap indices post worst weekly decline in two years
Mid-cap and small-cap stocks in India have faced major declines, indicating a shift in market sentiment. The Nifty MidCap 150 and Small-cap 250 indices reported their worst weekly falls in two years. Domestic retail investors initially supported these segments by increasing mutual fund contributions. However, concerns over rising oil prices and fiscal deficits are adding to market uncertainties.
Mumbai: Mid-cap and small-cap indices in India suffered their worst weekly decline in two years on Friday, exacerbating a sell-off that threatens to weaken the resilience of the broader equity market, according to wire services.<br><br>The Nifty MidCap 150 index plummeted 2.1%, while the Small-cap 250 index plummeted 2.8%, marking the worst seven-day performance for both indices since October 2024.
The broader market indices, including the BSE Sensex and the NSE Nifty 50, also slipped, with the Sensex falling 0.17% to close at 73,123.83 and the Nifty 50 declining 0.39% to end at 22,600.<br><br>This recent downturn has raised concerns that the risk-averse sentiment prevalent among blue-chip stocks may now be extending to the other asset classes.
This could potentially dampen the confidence of retail investors, who have contributed significantly to mutual funds, helping sustain the riskier segment of the equity market amid diminishing overseas interest. Factors such as unmet expectations of tax concessions, negative returns for the year, and high supply from foreign portfolio investors (FPIs) have contributed to the poor market sentiment.<br><br>Analysts attribute the market's downturn to stretched valuations and a broader risk-off environment, rather than a collapse in earnings.
The market is now calling for more reasonable valuations to justify higher discounting rates and clearer earnings delivery. The India VIX, a gauge of market volatility, surged 6%, signaling heightened uncertainty in the near term. Foreign portfolio investors (FPIs) netted shares worth ₹887.65 crore on Friday, while domestic institutional investors (DIIs) remained net buyers, purchasing equities worth ₹3,235 crore.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
